Wild East? All of Asia’s Cronyism Pales to What Is Going On at the Biggest Western Institutions

You have to love the chutzpah at HSBC Holdings. At the very moment it’s asking the courts to remove a ragged band of Occupy Wall Street protesters encamped under its Hong Kong headquarters, the largest European bank is also reminding the world why many people are so angry at bankers.

The subject of the anti-Wall Street crusade isn’t much to behold: A few dozen 20-somethings living in tents, lounging on shabby sofas, strumming guitars and handing out pamphlets. Their notoriety is all about location, location, location — the plaza beneath one of Asia’s most iconic buildings in the heart of Hong Kong’s financial district.

Turns out, HSBC is a more deserving target for the 99 percent than we knew. While it obsesses over a few demonstrators, HSBC has been cited for helping terrorists, drug cartels and other criminals launder money, according to a US Senate investigation. That includes, among others, transactions involving North Korea, Myanmar and Sudan, an axis of evil customers.

It wasn’t long ago that the United States was lecturing Asia about another evil: crony capitalism. Officials in Washington harped loud and long about how incestuous ties between finance and government led to crashes in Indonesia, Malaysia, South Korea and Thailand. Each day brings fresh evidence that Asia’s cronyism is quaint compared with the West’s.

The latest reminder is how Stephen Green, HSBC’s former leader and now Britain’s trade minister, has some serious explaining to do. Green’s boss, David Cameron, sure didn’t need this as the prime minister battles claims that he’s Rupert Murdoch’s poodle.

The Libor-fixing scandal that is ensnaring Barclays must fill Indonesia’s tycoons with envy. The worst that most of them did 15 years ago in Jakarta was get preferential financing from government-backed banks, and get breaks dealing with some red tape. In London, traders were cooking the global interest-rate system. Asians sure did think small.

As is often the case with hubris, the United States does it best. It takes a lot to shock scandal-weary global investors hardened by Enron and WorldCom. The corruption at the root of the subprime crisis did just that. Jon Corzine’s sudden flameout surprised Asians less than the deferential treatment that the US government still accords the former Goldman Sachs Group co-chairman and US senator.

“Government Sachs” conspiracy theories still abound in Asia. In recent years, even finance ministers would ask why the United States couldn’t seem to find a senior Treasury official who wasn’t a Goldman alumnus. Mouths were agape over how ex-Goldman guy Henry Paulson took care of his former employer come bailout time. Same for the lack of punishment after revelations that Goldman Sachs helped Greece fudge its way into the euro.

Cronyism also figures in Jamie Dimon’s comeuppance at JPMorgan Chase. His success in lobbying against stronger banking-industry regulation was predicated not just on perceptions that he was America’s best banker, but also on his cozy political ties.

This predicament brings the Occupy Wall Street and Tea Party movements full circle. Last October, former Alaska Governor Sarah Palin, a Tea Party favorite, made headlines in Seoul when she decried the “growing collaboration between big business, big finance, big government and big union bosses” in America. Like her or not, who would say she’s wrong?

Contrast that with Asia’s treatment of its financial industry. For all the concern about the Wild East, Singapore and Hong Kong look clean compared with London and New York and are cracking down on wrongdoing. In Hong Kong, two billionaire property developers and the city’s former No. 2 official have been charged with bribery-related offenses, the richest and most senior figures indicted in 38 years. Who’s going to prison over Wall Street’s crash? Where’s the accountability?

There are a couple of ways Asia might benefit from the West’s corruption and decline. One is how Asian banks will increasingly come into their own, underwriting local stock and debt sales that in times past would have necessitated Western bankers parachuting in. Another is China’s development.

The second-biggest economy is only now figuring out its banking laws and regulations. Doing so in this climate makes it easier for the conservatives to clamp down on speculative trading and shadow banking. All of these foreign scandals may lead to draconian safeguards in the short run, but ultimately a more stable economy.

An underappreciated aspect of the downfall of China’s Politburo bigwig Bo Xilai is how Western banking’s murky practices enable China’s ruling elite to enrich themselves, while obscuring this from the masses. Media scrutiny is being directed at the family of Xi Jinping, the man in line to be China’s next president. China has ample Western examples of what not to do.

That’s the key lesson for Asia: a little less chutzpah, a lot more accountability. It’s something the West could profit from, too. William Pesek is a Bloomberg View columnist.